Guide
Setting Up an Insolvency, Restructuring or Liquidation Practice in the UAE
Published
The short answer
Onshore, restructuring, preventive settlement and bankruptcy cases are opened and run by the competent UAE court under the Financial Restructuring and Bankruptcy Law, which appoints a trustee for each case rather than licensing a firm in advance. A DIFC or ADGM liquidation or administration instead runs through DIFC Courts or ADGM Courts under their own insolvency regimes, each with its own eligibility rule for the practitioner named to the case. The one thing that decides the route is whether the business wants to be the appointed trustee, liquidator or administrator itself, or to advise and support appointees who already hold that standing. The first needs a standing most new entrants do not yet have.
Who decides: courts, not a licence application
A trading licence for "insolvency" or "restructuring" consultancy does not, by itself, make a firm eligible to act as a trustee, liquidator or administrator. Onshore, the competent court opens a restructuring, preventive settlement or bankruptcy case and appoints a trustee to it; eligibility to be considered for that appointment is a separate question from the commercial licence. In the DIFC, DIFC Courts administer the DIFC Insolvency Law and decide who may act as office-holder in a DIFC company's case. In ADGM, ADGM Courts administer the ADGM Insolvency Regulations on the same logic. A firm can be correctly licensed to give restructuring advice and still have no standing to be appointed trustee, liquidator or administrator in any of the three regimes until it clears that separate bar, a distinction worth testing against how regulated professional advice is assessed more generally.
What the regime actually asks for
The structure is the same across onshore, DIFC and ADGM even though the authorities differ: a case is opened before a court, not registered as a service; a named trustee, liquidator or administrator is attached to that specific case; and the office-holder answers to the court for independence, the handling of estate assets and the treatment of creditors. None of the three regimes licenses a consultancy to describe itself generically as "an insolvency practice" in the way a trading activity is approved. A firm that wants eligibility to be appointed needs to meet the specific standing rule of the regime it is working in (onshore, in the DIFC, or in ADGM) before it accepts a case, not after.
How client and creditor money moves
Estate assets, creditor recoveries and any client money held during a case sit in segregated client-money arrangements, kept apart from the firm's own operating funds at every stage, under the oversight of the court or authority running the case. A bank assessing the practice for account readiness will want to see exactly which funds the firm ever controls, which it only reports on, and how estate money is reconciled against each case file. Where the source of funds behind a restructuring or a creditor payment is unusual (an overseas lender, a related-party settlement, an asset sale), the practice should be able to show where that money came from before a bank or a court asks.
Ownership, independence and the roles that must be filled
Independence from both the debtor and the creditors is central to every regime here, not an optional safeguard. Before taking a mandate, the practice needs a named individual meeting the eligibility rule of the regime involved, a conflicts check against the debtor and its known creditors, and a record of who within the firm has signing authority over estate matters. Where the practice is structured through a DIFC or ADGM entity specifically to access that regime's regulated standing, the ownership and governance of that entity should be set up as a regulated or complex ownership structure from the outset, rather than adjusted after a case is already open.
What commonly goes wrong
- Describing advisory work as if the firm already held trustee, liquidator or administrator standing
- Accepting a mandate while a related entity still owes money to, or is owed money by, the debtor
- Moving estate assets or paying a creditor before the court appointment is confirmed
- Treating a DIFC or ADGM standing as if it were recognised automatically onshore, or the reverse
Most of these trace back to the same error: assuming that a commercial licence to advise on restructuring also carries the separate standing to act as office-holder in a case.
Licence, operating file and renewal
Once a firm has cleared the eligibility rule for a regime, the operating file still needs the named individual's own professional indemnity cover, visas for the people actually running cases, and a renewal cycle that keeps the appointment current rather than lapsing between cases. Cost here is built in layers rather than one headline figure, and the Velarozone fee for this work is set out in the engagement letter; see how Velarozone works for that structure.
